The purchase was backed by Boardwalk Pipelines Holding’s $268 million for equity ownership, Boardwalk Pipeline Partners’ $132 million for its equity interest and a 5 year bank loan of $225 million. Boardwalk Pipelines Holding will own 67% of the JV and Boardwalk Pipeline Partners will own the remaining 33%.

Boardwalk Pipeline Partners believes this acquisition will support its diversification strategy as it will help it venture into the natural gas liquids business. Natural gas liquids business complements Boardwalk’s core natural gas pipeline and storage businesses.

Natural gas is usually an attractive choice because of its relative fuel efficiency, low emissions, quick construction timelines and low capital costs. There is an abundance of natural gas in the U.S. markets, resulting in lower prices. This trend is encouraging power generators to not only convert their existing plants to gas-fired ones but to build new nat-gas units.

PL Midstream boasts assets that can capitalize on the petrochemical boom in the U. S. Gulf Coast region. Also, it has 53.5 million barrels of salt dome storage capacity that includes 11.2 billion cubic feet of working natural gas storage capacity, brine supply infrastructure and 240 miles of pipeline transportation assets.

Additionally, it has fee-based contracts with an average lifespan of 10 years. Therefore, with PL Midstream in Boardwalk Pipeline portfolio, it will further fortify its presence as a diversified midstream energy company.

Loews Corporation currently holds a Zacks #4 Rank, translating into a short term Sell rating, while Boardwalk Pipeline Partners LP holds a Zacks #2 Rank, indicating a short-term Buy rating.